karnataka state policy for special economic zones 2009 with amendments

8/6/2019 Karnataka State Policy for Special Economic Zones 2009 With Amendments

1/21

1

PROCEEDINGS OF GOVERNMENT OF KARNATAKA

Sub: State Policy for Special Economic Zones 2009

Ref: Govt. Order No. CI 252 SPI 2001 dated 25.2.2002.

- - -

Preamble:

The Government of India have announced the concept of Special Economic Zones(SEZs) in the year 2000 through a revision in the EXIM Policy 1997-2002 with a viewto providing an internationally competitive and hassle free environment for production

of goods and services for exports. These SEZs are virtually deemed to be a foreignterritory within the Country, free from all the rules and regulations governing theimport and export. The SEZs are specifically treated as duty free enclaves for thepurpose of industrial, service and trade operations with exemption from customsduties and a more liberal regime on levies, foreign investment and other transactions.The domestic regulations, restrictions and infrastructure inadequacies are sought to beremoved for creating an investor and industry friendly environment. The SEZs wouldbe islands of excellence and efficiency.

These SEZs may be for a specific sector meant exclusively for one or more productsin a sector or one or more services in a sector. In the alternative a SEZ may be multi-product one, where the units may be set up for manufacture of two or more goods in asector or goods falling in two or more sectors or for trading and warehousing orrendering of two or more services in a sector or rendering of services falling in two ormore sectors.

As per the Government of India guidelines, SEZs can be developed in the public,

private or joint sectors or by the State Governments or their agencies or through PPPbasis. They are expected to promote establishment of large, self-contained areassupported by worldclass infrastructure oriented towards export production.


2/21

2

Exploiting the full potential of the concept of SEZs would bring large dividends to theState in terms of economic and industrial development and the generation of newemployment opportunities. The SEZs are expected to be engines of new economicgrowth.

Government of India has enacted the Special Economic Zones Act, 2005 and notifiedSpecial Economic Zones Rules, 2006. The SEZ Act specifies powers of the State togrant following exemptions vide Sec. 50 of chapter VIII:

a. Granting exemption from the State taxes, levies and duties to the Developer or theentrepreneur

b. Delegating the powers conferred upon any person or authority under any State Act

to the Development Commissioner in relation to the Developer or entrepreneur.

As per Rule 5 (5) of Chapter II of SEZ Rules 2006 regarding procedure forestablishment of SEZ, the State Government also has been directed to endeavor thatthe following are made available in the State for the proposed SEZ units anddeveloper before recommending any proposal for SEZ to Government of India forapproval:

a) exemption from the State and local taxes, levies and duties, including stamp duty,

and taxes levied by local bodies on goods required for authorized operations by aunit or developer, and the goods sold by a unit in the domestic tariff area except thegoods procured from domestic tariff area and sold as it is;

b) Exemption from electricity duty or taxes on sale, of self generated or purchasedelectric power for use in the processing area of a SEZ

c) Allow generation, transmission, and distribution of power within a SEZ as per theprovisions of Electricity Act, 2003

d) Providing water, electricity and such other services, as may be required by thedeveloper be provided or caused to be provided;


3/21

3

e) Delegation of power to the Development Commissioner under the IndustrialDisputes Act, 1947 and other related Acts in relation to the unit; and the workmenemployed by the developer;

f) Declaration of the SEZ as a Public Utility Service under Industrial Disputes Act,

1947;

g) Providing single point clearance system to the developer and unit under the StateActs and Rules.

There is a need for Policy pronouncement by the State Government to support andencourage development of SEZ by public, private or joint sectors or by the StateGovernment, or its agencies in the State.

Hence this Policy and Order.

GOVERNMENT ORDER NO CI 114 SPI 2007 BANGALORE,

DATED 28-2-2009

In the circumstances explained in the preamble portion of the Order, Government ispleased to announce a State Policy for Special Economic Zones 2009 as indicated inAnnexure to this Government Order. This Policy shall come into force withimmediate effect and shall govern the development, operation and management ofSpecial Economic Zones and the SEZ units to be established therein.

This order issues with the concurrence of the Finance Department vide U.O. Note No.FD/213/CSL/2008 dtd: 26.12.2008, Revenue Department vide U.O.Note A:PAE/342//2008 AP: 16.1.2009, Energy Department videU.O.Note No. EJ/6470/g/2008 AP: 1.1.2009, UrbanDevelopment Department vide U.O.Note No. UDD/ 238/BMR/2008 dtd: 14.10.2008,Public Works, Ports & Inland Water Transport Department vide U.O.Note No.

PWD/188/PSP/2008 dtd: 5.9.2008, Forest, Ecology & Environment U.O.Note No.FEE/91/SECY-ENV/2008 dtd: 26.8.2008, IT, BT & Science and TechnologyDepartment U.O.Note No. ITB/ 44/MDA/2008 dtd: 19.9.2008, Labour Department


4/21

4

U.O.Note No. LD/281/ LET/ 2008 dtd: 8.9.2008 and Infrastructure DevelopmentDepartment No. ID/59/ITS/ 2008 dtd: 16.9.2008.

The State SEZ Policy announced vide GO No. CI 252 SPI 2001 dated 25-2-2002stands withdrawn.

By Order and in the name of theGovernor of Karnataka

Sd/-(Subir Hari Singh)

Principal Secretary to GovernmentCommerce & Industries Department


5/21

5

Annexure to Government Order No. CI 114 SPI 2007 dated 28.02.2009

State Policy for Special Economic Zones 2009

I. Introduction

The State Government has a vision to achieve a GSDP of over 9% which in turncalls for industrial growth of 12%, focus on strengthening manufacturingindustry in the State and to increase the share of GSDP from the presentaverage of 16.7% to over 20%. It is also targeted to achieve an increased shareof Karnatakas exports in National Export from the present 15% to 20%.

Among the strategies, the Policy emphasizes development of industrialinfrastructure. Special Economic Zones (SEZs) with worldclass infrastructureare expected to accelerate economic development. It is proposed to promoteSEZs in addition to specialized industrial infrastructure for specific sectors.

The SEZ Act 2005, enunciated by the Government of India and the consequentSEZ Rules 2006 govern establishment of SEZs in the Country. As per this Act,the State Government is required to frame its own Policies and bring necessary

amendments to the relevant State level Acts / Regulations.

Realising the potential of SEZs in driving industrial and economic growth, theState Government is committed to support and facilitate setting up of SEZs inKarnataka. This Policy will encourage healthy proliferation of SEZs.

II. Objectives

The prime objective of the Policy is to facilitate & expedite establishment ofSEZs, at the same time safeguarding the environment and the interests of

landowners. The Policy provides for a package of incentives, supportivemeasures besides clarity on procedural guidelines.


6/21

6

III. Policy Measures

1. Single Point Clearance

The State High Level Clearances Committee (SHLCC) constituted as per theKarnataka Industries (Facilitation) Act, 2002, will act as Single Point

Clearance for the SEZ Developer/Co-developer, for consideration andapproval of SEZ projects and recommendation to the Government of India,for approval.

For Single Point Clearance to SEZ units, the State Government will considerdelegating the power of all its clearances to the Unit Approval Committeeheaded by the Development Commissioner, SEZ and the officers of theconcerned departments will be deputed to the Development CommissionersOffice to function under the administrative supervision and control of thedesignated Development Commissioner of SEZs to accord necessaryclearances and approvals to SEZ units..

2. Land for SEZs

Proponents of SEZs can utilize their own land including jointdevelopment/lease land or acquire the required land by one of the followingprocedures:

(i) Purchase converted land from land owners, subject to the confirmationof land use in the approved master plan.

(ii) Purchase land under Section 109 of the Karnataka Land Reforms Actwith the approval of the SHLCC. The Revenue Department canfacilitate purchase of land after due approvals of SHLCC and as perlaw.

(iii) The State Government or its undertakings may allot land to the SEZ outof the land acquired by them for industrial purposes, with the approval

of SHLCC. Such allotment of land is subject to Government of Indiaguidelines issued from time to time.


7/21

7

(iv) The State Government may acquire the required land for the SEZ, withthe approval of SHLCC and would transfer such land to theDeveloper/Co-developer of SEZ concerned, as per the KIAD Act, 1966.Such acquisition of land is subject to the Government of Indiaguidelines issued from time to time.

(v) Acquisition / purchase of land are subject to the following:

a. SEZs can preferably be established in waste, karab, dry and singlecrop land. Use of agricultural land to be kept to the minimum.Utilization of agricultural land is subject to the Government of Indiaguidelines issued from time to time.

b. SEZ Applications for the State High Level Clearance Committeewill essentially include a Resettlement and Rehabilitation plan in

line with the guidelines issued by the Government of India fromtime to time.

3. Infrastructural Facilities

With a view to create world-class infrastructural facilities for export orientedproduction / operations, the Developer or Co-developer is encouraged todevelop, construct, install, operate, manage and maintain any or all of thefollowing infrastructure facilities, amenities and services in the SEZ in

accordance with the guidelines/orders of Government of India andGovernment of Karnataka in this regard:(i) Provision of roads and bridges;(ii) Generation, transmission and distribution of electricity;(iii) Water extraction, treatment, transmission and distribution;(iv) Provision of minor port and related services;(v) Provision of gas distribution network;(vi) Provision for communication and data network transmission;(vii) Waste water treatment and solid waste management; and(viii) Any other services essential for smooth operations of SEZ units.


8/21

8

The Developer or Co-developer may collect reasonable user charges for thefacilities created.(i) Provision of roads and bridges

The Developer/Co-developer or his agent may develop, operate and

maintain the road network, bridges, transportation services and anytransportation system within the Zone and to levy toll or fee forproviding such facility.

The State will facilitate reliable road connectivity from main highwaysup to the SEZ either through its own agency or through PPP or permitthe Developer/Co-developer to do so and in such a case theDeveloper/Co-developer will be permitted to set, collect and retain toll,as may be approved by the Government.

(ii) Generation, Transmission and Distribution of electricity

The generation, transmission and distribution of electricity in the SEZwill be facilitated as follows:

The Developer/Co-developer or his agent, for the SEZ shall be deemedto have license to supply electricity to their respective areas anddevelop the distribution network for the same.

The Developer /Co-developer or his agent shall be deemed to be alicensee under section 14 of Electricity Act, 2003

The Developer/ Co-developer or his agent as the case may be, willhave an option to purchase electricity for the SEZ and activities thereinor its consumption from any State Electricity Company or Corporationand any other generator of electricity including Central Power SupplyUndertakings (CPUs). Such purchaser shall be deemed to have anapproval to use the transmission and distribution system of the

transmission and distribution agency under the Electricity Act 2003,subject to payment of appropriate wheeling charges and availability oftransmission capacity.


9/21

9

Any sale of electricity to the SEZ or units therein shall be exemptedfrom payment of Electricity Duty or Taxes on the electricity consumed.

(iii) Water extraction, treatment, transmission and distribution

The Developer/ Co-developer or his agent will be permitted to setupsystems and facilities for water extraction, treatment, transmission anddistribution of water within the SEZ, provided the applicable servicestandards, as approved are met.

The Developer/ Co-developer or his agent in SEZ or the authority or itsagent in designated area as the case may be, will be permitted to setupsystems and facilities for waste water treatment and solid wastemanagement.

Provided that, the applicable service standards, as approved by therelevant authority under its regulations for such systems and facilitiesare met.

(iv) Minor Ports and related services

Subject to the Policy laid down by the Government regarding ports, theDeveloper/ Co-developer or his agent may develop, operate and

maintain a minor port within the Zone, for landing of goods for use inthe Zone and for the shipping of goods from the Zone.

The Developer/ Co-developer or his agent will manage for landing ofother cargoes (not meant for the Zone) as per terms and conditionsprescribed by the regulations of the State Government.

The Developer/ Co-developer or his agent may fix and collect tarifffrom the vessels entering in the minor port within the Zone and on the

goods landed and shipped at the port in accordance with the directionsof the State Government.


10/21

10

(v) Provision of gas distribution network

The Developer/ Co-developer or the Township Authority may, subjectto the policy laid down in this regard by Central Government, and theState Government, setup and maintain gas distribution system in the

SEZ.

(vi) Provision for communication and data network transmission

The Developer/ Co-developer or the Township Authority may, subjectto the policy laid down in this regard by Central Government, and theState Government, setup and maintain communication and datanetwork transmission in the SEZ.

4. Labour related issues

The power of the Labour Commissioner, Government of Karnataka shall bedelegated to the designated Development Commissioner or other Authorityunder the Industrial Dispute Act, 1947 and other related acts in respect of theunit and workmen employed by the Developer/ Co-developer. Officer fromthe Labour Department will be deputed to function under the administrativesupervision and control of the designated Development Commissioner of theSEZs to accord all necessary clearances and approval relating to variouslabour laws.

All industrial units and other establishments in the SEZs will be declaredPublic Utility Service under the provisions of the Industrial Dispute Act,1947.

The procedure for submission of returns under various labour laws will bestreamlined, and the Developer/Co-developer or the units in the Zone mayfurnish the consolidated annual report in the prescribed form to the

Development Commissioner instead of periodical returns under thefollowing Acts:


11/21

11

(i) The Workmens Compensation Act, 1923(ii) The Payment & Wages Act, 1936(iii) The Factories Act, 1948(iv) The Minimum Wages Act, 1948(v) The Maternity Benefit Act, 1961(vi) The Payment of Bonus Act, 1965(vii) The Contract Labour (Regulation and Abolition) Act, 1970 and(viii)The Karnataka Shops and Commercial Establishment Act 1961(ix) Such other Acts as the State Government may, by notification in the

Official Gazette specify

When any other Act made by the Parliament is to be specified by the StateGovernment, it shall be specified with prior approval of the Government of

India.

5. Fiscal Benefits

Following fiscal benefits will be offered to Developer, Co-developer andUnits operating in the SEZ:

(i) For SEZ developers and Co-developers:

(a)All purchases excluding purchase of petroleum products fromdomestic tariff area for authorized operations of entire area in SEZsshall be exempted from State and local body taxes or levies or cesssuch as Sales Tax, VAT, Entry Tax, Special Entry Tax. Thisexemption will not be available for the goods sold in the domestictariff area with or without value addition.

(b)Exemption of Stamp Duty and Registration fees for Registration ofLand and Loan/Credit Documents.

Provided that exemptions in respect of stamp duty and registration feerelating to transaction of land for development of the SEZ between theDeveloper/Co-developer and the land owners and between the


12/21

12

Developer and Co-developer would be available for the firsttransaction only. For KIADB acquired and allotted land, exemption ofStamp Duty and Registration fees shall be available both at the time ofexecution of lease deed / lease cum-sale deed and absolute sale deeds.

(c)Exemption of Electricity Duty or Taxes on sale, of self generated orpurchased electric power for use in the processing area of SEZ.

(d)Exemption of 1% Labour Welfare Cess on construction cost incurredby the developer / co-developer.

(e)One time capital subsidy up to 50% of the cost incurred for setting upCommon Effluent Treatment Plant subject to a ceiling of Rs. 100

lakhs per CETP / SEZ.

(f)Exemption from any other State taxes, cess, duties or levies as may benotified by the State Government, from time to time for SEZs.

(ii) For SEZ Units:

(a)All purchases excluding purchase of petroleum products by SEZ unitslocated in the processing areas from domestic tariff area or SEZ areafor its set up, operation or maintenance or for use in manufacture,trading, production, processing, assembling, repairing, reconditioning,re-engineering or packing shall be exempted from State and localbody taxes or levies or cess such as Sales Tax, VAT, Entry Tax andspecial Entry Tax. This exemption will not be available for the goodssold in the domestic tariff area with or without value addition, if sold,applicable State taxes are levied.

(b)50% Exemption of Stamp Duty and Registration fees for Registration

of lease deeds/sub-lease deeds in respect of industrial land/built-upspace and Loan/Credit Documents in the processing area.


13/21

13

Provided that exemptions in respect of stamp duty and registration feerelating to transaction of industrial land / built up space between theSEZ Developer / Co-developer & the Units would be available for thefirst transaction only.

(c)Exemption of Electricity Duty or Taxes on sale, of self generated orpurchased electric power for use in the processing area of SEZ.

(d)Exemption of 1% Labour Welfare Cess on construction cost incurredby the Unit.

(e)Exemption from any other State taxes, cess, duties or levies as may benotified by the State Government, from time to time.

6. Registration of MSMEs and IT / BT units

The power to accept Entrepreneurs Memorandum from Micro, Small andMedium Enterprises (MSME), Letter of Approval and Registration ofInformation Technology / Biotechnology units, will be delegated to theDevelopment Commissioner or other designated authority in respect of unitsin the SEZs.

7. Law and Order

The State Government will make appropriate and exclusive arrangementswithin the SEZs for maintenance of law and order.

8. Inspections

An authority / representative of any department / agency of Government ofKarnataka will carry out any physical inspection with the prior approval ofthe Development Commissioner of SEZ specifying the purpose of inspection

in the processing area.


14/21

14

9. Development Commissioner

All matters pertaining to SEZs in the State will be coordinated byDevelopment Commissioner(s) or other authorities appointed byGovernment of India for the SEZ under section 11 of the SEZ Act, 2005.

10. SEZs as Industrial Townships

SEZs will be declared as Industrial Townships under the Karnataka

Municipalities (Third) Amendment Act, 2002 to enable the SEZs to function

as self governing and autonomous municipal bodies.

11. Terms and Conditions

SHLCC shall approve the SEZ projects on the following terms andconditions.

(i) SEZ developer / Co-developer / SEZ units need to prepare a HumanResource Development plan to train the land losers / local persons andorganize training for such people and provide employment to thosepersons.

(ii) SEZ developer / Co-developer / SEZ units need to provide a minimum80% job to local people on overall basis.

(iii) SEZ developer /Co-developer / SEZ units, wherever there is a scope forVendor Development shall prepare a Vendor Development Plan andprovide Entrepreneurship Development Training to the local personsand facilitate setting up of service / manufacturing vendor enterprises.

(iv) SEZ developer shall prepare a plan for adequate social infrastructureand public amenities for the affected persons and such facilities shouldinclude educational institutions, hospitals, water supply schemes, road,

etc. and implement the plans as per schedule.


15/21

15

(v) Amenities created by SEZ developers / Co-developer / SEZ units in thenon-processing area of the SEZ like schools, colleges, hospitals etc.shall be accessible to the affected persons.

(vi) Developer /Co-developer after the approval of SHLCC, who availed

stamp duty and registration fees exemption for registration of landwhich was acquired as mentioned in Clause III (2), shall be liable topay back the amount of stamp duty and registration fees exemption tothe Government, in case the land acquired by them has not beennotified as an SEZ from Government of India within two years fromthe date of approval of SHLCC.

(vii) Developer/Co-developer/SEZ unit shall be liable to pay back all thefiscal benefits availed under this policy to the Government in case the

Developer/Co-developer/SEZ unit does not implement the SEZ or optout of SEZ.

IV. Monitoring & Review Committee

A Committee shall be constituted under the Chairmanship of the Chief

Secretary to Government, to ensure smooth operation, monitoring and

review of implementation of SEZs with following composition:

a. Chief Secretary to Government, Chairman

b. Principal Secretary to Government, C&I Dept Member

c. Principal Secretary to Government , Finance Dept. Member

d. Principal Secretary to Government, Energy Dept. Member

e. Pr Sec/ Secretary to Govt, IT & BT Department Member

f. Pr Sec/ Secretary to Government, Revenue Dept. Member

g. Pr Sec/ Secretary to Government, FEE Dept. Member

h. Pr Sec/ Secretary to Government, PWD Dept. Member

i. Pr Sec/ Secretary to Government, UDD Memberj. Pr Sec/ Secretary to Government, Labour Dept Member

k. Pr Sec/ Secretary to Government, Inf Devpt. Dept. Member


16/21

16

l. Secretary to Government (SSI), C & I Dept. Member

m.Secretary to Government, Water Resource Dept. Member

n. Commissioner for Commercial Taxes Member

o. CEO and EM, KIADB Member

p. Development Commissioner of SEZs Memberq. Member Secretary, KSPCB Member

r. Commissioner for Industrial Development Member Secretary

The Committee can invite any other members if necessary as special invitee.

Separate guidelines for administration of the policy will be issued by thiscommittee for the guidance of the concerned agencies and officers.Interpretation of this Government Order / Policy and the decision thereon ofthis committee shall be final.

*****


17/21

17

PROCEEDINGS OF THE GOVERNMENT OF KARNATAKA

Subject: Withdrawal of exemption of 1% Labour Welfare Cess onconstruction cost incurred by the Developer / Co-developer /unit under the State Policy for Special Economic Zones-2009.

Read: Government Order No. CI/114/SPI/2007 dated: 28.02.2009.

Preamble:

As per Central SEZ Act 2005 and Rules 2006, the Government of Karnataka

has formulated and announced State Policy for Special Economic Zones 2009 on

28.02.2009. In the said Policy, exemption of 1% Labour Welfare Cess on construction cost

incurred by Developer, Co-developer and unit has been offered.

First Monitoring and Review Committee of SEZ meeting was held under the

Chairmanship of the Chief Secretary to Government on 07.07.2009. In the said meeting

the Secretary to Government, Labour Department informed that exemption of 1% Labour

Welfare Cess does not come under the purview of State Government and as per the

Central Building and other Construction Workers Cess Act 1966, the builder / employer has

to pay cess at the rate of 1% on the cost of the construction & hence it was resolved for

withdrawal of 1% Labour Welfare Cess with the approval of Cabinet.

GOVERNMENT ORDER NO: CI/114/SPI/2007, BANGALOREDATED: 29.10.2009

In the circumstances explained above, Government hereby withdraws Exemption of1% Labour Welfare Cess on construction cost incurred by the developer / co-developer

with immediate effect, under the State Policy for Special Economic Zones-2009.

This Order issues with concurrence of Cabinet Meeting No. C:482 /2009 dated:

22.10.2009.

By Order and in the name of theGovernor of Karnataka

-Sd-

(Aparna Pavate)Desk Officer (Technical Cell)Commerce and Industries Department


18/21

18

PROCEEDINGS OF THE GOVERNMENT OF KARNATAKA

Sub: State Policy for Special Economic Zones 2009, Amendmentof para III 5(i) (a) and para III 5 (ii) (a) reg.

Read: 1. Govt. Order No: CI 114 SPI 2007, dated:

28.02.20092. Proceedings of the meeting of Monitoring andReview Committee dated: 26.06.2010.

3. Govt. Order No: CI 114 SPI 2007, dated:29.10.2009.

4. Approval of the Cabinet Meeting dated: 14.1.2011,vide C:648/2010

-:0:-PREAMBLE:

As per Central SEZ Act 2005 and Rules 2006, the Government of Karnataka has

formulated and announced State Policy for Special Economic Zones 2009 on 28.02.2009.

In the said policy, under Fiscal Benefits chapter para III 5 (i) (a) and III para 5 (ii) (a) reads

as below:

III 5 (i) (a) For SEZ developer and Co-developers

All purchases excluding purchase of petroleum products from domestic tariff area for

authorized operations of entire area in SEZs shall be exempted from State and local

body taxes or levies or cess such as Sales Tax, VAT, Entry Tax, and Special Entry

Tax. This exemption will not be available for the goods sold in the domestic tariffarea with or without value addition.

III 5 (ii) (a)-For SEZ units

All purchases excluding purchase of petroleum products by SEZ units located in the

processing areas from domestic tariff area or SEZ area for its set up, operation or

maintenance or for use in manufacture, trading, production, processing, assembling,

repairing, reconditioning, re-engineering or packing shall be exempted from State

and local body taxes or levies or cess such as Sales Tax, VAT, Entry Tax and

2


19/21

19

- : 2:-

Special Entry Tax. This exemption will not be available for the goods sold in the

domestic tariff area with or without value addition, if sold, applicable State taxes are

levied.

Third Monitoring and Review Committee of SEZs meeting was held under the

Chairmanship of the Chief Secretary to Government on 26.06.2010. In the said meeting,

the Principal Secretary to Government, Finance Department informed that large housing,

service apartments, hotel, school, recreations club, shopping complex etc., will be

established in the non processing area where no manufacturing / service activities will take

place. So the Finance Department felt that there is no need in extending the VAT

exemption as per KVAT 2003 to non-processing area. The committee agreed with the

Finance Department views and advised the Commerce and Industries Department to

amend the State Policy for SEZs 2009 in line with the KVAT 2003 extending exemptions

only to the processing area of SEZ.

The Principal Secretary to Government, Finance Department also informed that the

KVAT Law provides exemption of VAT to some petroleum products such as Naptha,

Lubricants, etc covered under KVAT Act and accordingly the State Policy for SEZs 2009

may be amended in line with KVAT 2003. However, the petroleum products covered under

KST does not fall under exemption of taxes for SEZs.

In the Monitoring & Review Committee meeting of SEZ held on 26.06.2010 under

the Chairmanship of Chief Secretary to Government, it has been resolved to amend the

State Policy for SEZs-2009 under Fiscal Benefits chapter para III 5 (i) (a) and para III 5 (ii)

(a).

Government has examined the proposal in detail...3


20/21

20

-: 3 :-

Hence the following order.

GOVERNMENT ORDER NO: CI 114 SPI 2007(P-1) BANGALOREDATED: 07.02.2011

In view of the circumstances explained above, the Government is pleased to

substitute Para III 5 (i) (a) and Para III 5 (ii) (a) under Fiscal Benefits Chapter of State

Policy for Special Economic Zones 2009, with the following:

III 5 (i) (a) For SEZ developer and Co-developers

VAT levied on sales made by dealers in domestic tariff area to SEZ developers and

co-developers for development, operation and maintenance of processing area in SEZshall be exempted. This shall be by way of refund to SEZ developers / co-developers of

VAT charged in the corresponding sale bills issued by sellers to them.

State taxes such as Entry Tax and Special Entry Tax and local body taxes / levies or

cess, which are payable on supplies of goods (excluding petroleum products covered under

KST Act) made by dealers in the Domestic Tariff Area to developers and co-developers for

development operation and maintenance of processing area in SEZ, shall be exempted.

The aforesaid tax relief will not be available on those goods which are procured by

developers / co-developers from domestic tariff area and resold in domestic tariff area or

used in the manufacture of goods which are sold in domestic tariff area with or without

value addition.

III 5 (ii) (a)-For SEZ units

VAT levied on sales made by dealers in domestic tariff area to SEZ units located in

the processing areas for use in their set up, operation or maintenance or for use in

manufacture, trading, production, processing, assembling, repairing, reconditioning, re-

engineering or packing shall be exempted. This shall be by way of refund to the SEZ units

of VAT charged in the corresponding sale bills issued by sellers to them.

.4


21/21

-: 4:-

State taxes such as Entry Tax and Special Entry Tax and local body taxes / levies or

cess, which are payable on supplies of goods (excluding petroleum products covered underKST Act) made by dealers in the Domestic Tariff Area to SEZ units (located in processing

area) for set up, operation or maintenance or for use in manufacture, trading, production,

processing, assembling, repairing, reconditioning, re-engineering or packing, shall be

exempted.

The aforesaid tax relief will not be available on those goods which are procured by

SEZ Units from domestic tariff area and resold in domestic area or used in the manufacture

of goods which are sold in domestic tariff area with or without value addition.

By Order and in the name of theGovernor of Karnataka,

-Sd-[A.V. Srinivasa Dikshit]

Desk Officer (Technical Cell)Commerce & Industries Department.